What steps can I take to get approved for a home loan?

[cesar07]

@sarahrachel Advice in this thread is awful, I am a mortgage broker and can tell you the only thing likely stopping you is your defaults dropping off and possibly affordability depending on the car loan repayments and your partners income.
You look like a good candidate for a 5% deposit loan

Edit: Just saw your partner is 75k. The test for the 150k cap is the last 12 months earnings - if you have received pay increases you may be below this now and about to increase out. Maybe worth applying before that happens. Approval would likely depend on what the defaults were,.

 

[iferexo]

@sarahrachel Rent for $175, if it's comfortable I'd just stay for 5 years at least and save like mad whilst reducing debt that's costing you interest. You're essentially working for someone else to get paid whilst savings/investments is your money working to pay you.

 

[hurrix]

@sarahrachel Solid advice in this thread but as a smaller point I'd add is to check your insurances. $19/wk for a 31yo and a Demio seems like a lot. I pay half that.

Shop around and you could save another $500+/y.

 

[rapaines]

@sarahrachel Um $1000 per year for insurance on an old demio!? Why so high?

 

[sarahrachel]

@rapaines I got another comment like this. I'm not sure? I got full party and stuff I guess? I've had my full for 10 years and no demerits.

 

[youb4me]

@sarahrachel You are absolutely getting screwed on that, I have full+fire,theft and breakdown on a turbo Impreza as a 26yo and barely paying half that

 

[rapaines]

@sarahrachel Should be more like $200-$300. You're paying more than I pay on my brand new Ranger.

 

[thomasw59]

@sarahrachel I think you should just keep on doing what your doing and not worry about buying a house. Just pay off all the debts and save some money. Then enjoy your life with the freedom without house problems. Increasing your income is most important. So get better at what you do and try to stay busy working on self development.

Looks like the market is going to tank anyway so no point getting caught up in it. If you can move back with your parents or family to save on the costs that’s great. But if it’s not possible just work on being more disciplined and having life organised like never before.

 

[vladimir30]

@sarahrachel What's your partner's income and financial situation?

 

[sarahrachel]

@vladimir30 He's on $75000, debt free. $10000 in savings. And 20k in his kiwisaver. He's also just switched roles and is now currently saving around $400 p/w.

 

[lxmai95]

@sarahrachel Put everything into paying down debt. Also banks consider credit limit as potential debt so best to cancel your credit card when your applying for a mortgage then get one once you have a mortgage.

 

[fiftie]

@sarahrachel You've done great so far getting into a better financial position, keep it up!

 

[resjudicata]

@sarahrachel Great progress in the past few years!! Also your necessary expenses look great.

Idk if it’s obvious or not but this structure would be best for your credit score (used to do mortgage & property consulting, these are what helped my clients):

• budget your weekly income after taxes. Personally what gets me is turning these numbers into percentages to realise just how much I’m spending/wasting/saving.
• take care of overdraft or GEM first-depends on which has the closest due date & higher interest rate
• stay at your job, or increase pay for at least another 12 months. The more stability you show the better
• avoid large debts, as in things you can’t pay off in one months time unless it’s completely necessary like health, or family emergencies
• always pay 1-2 weeks before due date for debts if you can. To raise credit score you can intentionally go into low debts simply to pay off quickly
• raise KiwiSaver % if you can depending on your budget. KS matches your contribution by a $521.43 if I remember correctly annually depending on if you’re able to pay $1,043 a year (if less than the govt pays less-it’s 50c matching for every dollar till the cap of $521.43).
• if you have someone trustworthy around you like a family member then try partnering up with them to increase chances for buying a house. It increases your chances significantly but imo only do this if they’re really trustworthy. Not like someone you’ve dated for 1 year haha
• your car is under your grandma’s name, what a GC for taking it on her name, so continue paying the interest off.
• your student loan will & should always be slowly being paid off on the side-last priority out of necessary/debt expenses since it has no interest & you only need to show that you’re taking the initiative to pay it off when you can.

Habits:
- don’t be a normal consumer. Don’t buy into ads & what’s in front of you, always judge on if it’ll benefit you in the long run. Eg. If you want to buy a camera is it only bc it’s on sale or is it bc you’ve been wanting to practice photography skills for a while now and plan on sharing your art? Maybe could end up freelancing photography in the side-just saying small plans to maximise the purchases you make really help
- if you’re going out for the night find a good liquor store, drink up at home w/ friends before going out to bars/clubs
- buying things in bulk-only the necessities- can really help, eg. Protein, toilet paper, cleaning products

 

[saorabha]

@sarahrachel Lots of of great advice here. I just wanted to congratulate OP for turning his life around. Keep on keeping on.

 

[joe8923]

@sarahrachel Talk to a mortgage broker, they are free and a good one will help you make a plan

 

[igor784hg]

@sarahrachel Get all that debt paid off then start investing into a broad low cost etf (InvestNow foundation funds). In 5-10 years you will be ready for that house. Good luck. It’s cheaper to rent than own atm.

Also make sure you always have at least 3 months of living expenses as savings incase you lose your job etc.

 

[mella]

@sarahrachel Best decision I ever made was to sit down with a budget advisor.

Most towns/cities have them and they are free.

They help you sort your shit, get ahead with financial goals and become a better you financially. Plus unlimited support after initial budget is made.

Can't recommend the service enough.

 

[maysville]

@sarahrachel You need to work on your serviceability.

Debt matters but not as much as I previously thought - it’s more about ensuring you have enough to pay the actually mortgage.

You need to do a budget and figure out what money you currently have uncommitted every pay cycle first one for your current state to work out what you can comfortable save and another one where you should include all payments you currently make that will 100% be done in 12 months time when you go for a home loan approval. That is the amount of money you have to spend on a mortgage (provided nothing changes)

If you have any open credit cards or after pay - regardless of if you use them, then the full limit of them will be taken into consideration for your loan. Lower the ones you need but don’t need high (eg mine is 1k only) and get rid of whatever else you don’t need once it’s paid off.

 

[maysville]

@sarahrachel I’ll also add that if your partner is being gifted the land then you may be able to use its value as equity for an overall loan (land + building). Not 100% on that though.

 

[jpnewsom_]

@sarahrachel Pay off your debts, but know that the bank will class a 10k credit card as a 10k liability regardless of the balance. So once you’ve paid the card off cut it up.